\documentclass{standalone}

\usepackage{newtxtext,newtxmath}
\usepackage[T1]{fontenc}
\usepackage{tikz}
\usetikzlibrary{decorations.pathreplacing, angles, quotes, shapes, patterns, arrows.meta, bending, positioning}

\begin{document}
    \begin{tikzpicture}[scale = 0.8]
        \draw[thick] (0,10) node[left]{1}  -- (0,0) node[midway, left=25pt, rotate=90, anchor=center]{Low-Ability Incumbents' Policy Decision $\sigma$} node[anchor=north east]{0} -- (10,0) node[midway,below=20pt]{Incumbent's Prior Expected Ability $\kappa$} node[right]{1};
        \draw[thick, dotted] (2,5.5) -- (2,0) node[below=2.5pt]{$\gamma$};
        \draw[smooth, variable = \x, thick, domain = 0:2] plot({\x}, {10 - (18) * ( (\x) / (10 - \x))});
        \draw[smooth, variable = \x, thick, domain = 2:200/64] plot({\x}, {(22) * ( (\x) / (10 - \x))});
        \draw[thick] (200/64, 10) -- (10,10);
        \draw[thick, dotted] (200/64,0) node[below=2.5pt, scale=0.75]{$\frac{\gamma}{\gamma + \left(1 - \gamma\right) \times \pi}$} -- (200/64, 10);
        \draw[dotted, thick] (0,5.5) node[left]{$\pi$} -- (2,5.5);
        \node (A) at (7,6) {$\sigma = 1 - \frac{\kappa \left(1 - \gamma\right)\left(1 - \pi\right)}{\left(1 - \kappa\right) \gamma}$};
        \draw[thick, -Stealth] (A) to[out=180,in=0] (1.2195, 7.5);
        \node (B) at (7,8) {$\sigma = \frac{\kappa \left(1 - \gamma\right)\pi}{\left(1 - \kappa\right) \gamma}$};
        \draw[thick, -Stealth] (B) -- (8/3, 8);
    \end{tikzpicture}
\end{document}

